New Rules when ending a tenancy for Landlord’s Own Use

On September 1, 2017, the rules changed for all small landlords in Ontario who give notice for the termination of a residential tenancy because they require the unit for their own use, or for the use of an immediate family member, defined as owner’s parent, spouse, child, and spouse’s parent or child.

The old forms may be used for 30 days and will no longer be valid after September 30, 2017. Landlords are encouraged to use the new forms to avoid any confusion.

What does end of term mean?

If the rent is paid monthly and due on the first of the month, the end of term is the last day of the month. If the tenancy is a fixed term tenancy, such as a one year lease, the termination date on the N12 must coincide with the last day of the lease.

What’s changed?

Effective September 1, 2017, amendments to the Residential Tenancies Act, 2006 (RTA) now require the following:

Landlords are required to pay the tenant one month’s rent compensation or offer the tenant an acceptable alternate rental unit when terminating a tenancy based on own use;

The landlord or immediate family member requiring the rental unit must occupy the unit for a minimum twelve months;

Landlords giving this notice must be an individual who owns the rental unit in whole or in part;

It is now an offence under the RTA for a landlord to knowingly end a tenancy by giving notice in bad faith. A conviction for this offence can result in a fine of up to $25,000 for an individual.

It is presumed, unless the contrary is proven on a balance of probabilities, that a landlord gave a notice of termination in bad faith, if within one year:

the landlord advertises the rental unit for rent;

enters into a tenancy agreement in respect of the rental unit with someone other than the former tenant;

advertises the rental unit, or the building that contains the rental unit, for sale;

demolishes the rental unit or the building containing the rental unit; or

takes any steps to convert the rental unit, or the building containing the rental unit, to use for a purpose other than residential premises.

What is compensation and when must it be paid?

Section 48.1 of the RTA requires that compensation equal to one month’s rent be paid to the tenant prior to the termination date specified on the N12 notice. Landlords may file an application with the LTB to obtain an order terminating the tenancy pursuant to the notice prior to the termination date. Landlords are encouraged to file their L2 application prior to the termination date to ensure the payment of compensation to the tenant becomes part of the LTB order.

What is bad faith?

Bad faith occurs when a landlord gives a tenant a Form N12 notice for own use as a way to end the tenancy because of other issues. This means the landlord or their immediate family members, does not have a genuine intention to move into the unit for the purposes of living there themselves. For example, a tenant may be causing damage in the unit or disturbing other tenants and in order to address the situations, the landlord serves the tenant with a Form N12 because the landlord believes this is the least combative way to ask the tenant to leave. This is a common mistake made by landlords which can lead to serious consequences.

If a landlord is found by the Landlord and Tenant Board to have acted in bad faith, the landlord could be ordered to pay the following:

All or any portion of any increased rent that the former tenant has incurred or will incur for a one year period after vacating the rental unit;

Reasonable out-of-pocket moving, storage, or other like expenses that the former tenant has incurred or will incur;

An abatement of rent;

An order that the landlord pay a fine to the Board;

Any other order the Board finds appropriate.

Why have these changes been made?

The changes are intended to increase protection for tenants and discourage landlords from unlawfully evicting tenants, whether to convert to a short-term rental or re-rent at a higher rate.

The recent changes are one of the components of the province’s Fair Housing Plan, a sixteen point action plan intended to make housing more accessible.